The economics of new media ventures like Vox

Key to the economical models of new media outlets is not journalism, but their technology. In this column, we are taking a closer look at the business model of Vox.

Just about every company with a reputation problem, for instance, should be jumping at the opportunity to be able to tell their story using Vox’s technology and platform.

In what is yet another masterful analysis of the news industry, Felix Salmon writes the quote above at the end of his article about Vox.com, Ezra Klein and The Washington Post.

The rest of the article is great, but this part is fantastic. At least to me. I don’t hide my fascination with new outlets like Buzzfeed or Vox, but I wasn’t quite sure whether the economics behind those venture will work. While the current inflow of VC money into news organizations is paying for the current unraveling, I am still not sure if long-form, investigative journalism and VC money can work together. That being said, VC’s obviously do not invest into journalism, they always invested in the tech. It’s the only part of companies like Buzzfeed at Vox that is scalable at a rate that is remotely interesting to venture capitalist. My hesitation was that: if those companies don’t earn money quickly enough, it is not the developers who will be fired first.

But with that one bit of information in Salmon’s blog post, I got a missing piece of the information needed to understand the economics of a venture like Vox.

If you are active in the publishing and / or media industry, you will have heard of buzzwords like brands as publishers or native advertising.

Native advertising is now a proliferated instrument in the ad business. Facebook does it. Tumblr does it (somebody on Twitter said that Tumblr is Yahoo’s native advertising format, which is both funny and can be correct). Vox.com does it.

Vox.com has build a piece of technology that, as Salmon mentions as well, allowed Ezra Klein to build a new news outlet in 15 weeks. 15 weeks! That’s nothing. That’s the time that the management of a German newspapers requires to decide whether or not to launch a new blog. If they are lucky and can bypass the print editorial team.

With flagship products like Vox.com, The Verge and Polygon, Vox ensures that they can shape the market according to their needs and build the technology to power it.

Enter brands as publishers. Simply put: why should a brand spend money on advertising, if they can spend that money on creating their own content for their own properties? That’s something that very few brands pulled off successfully and it took most of them a decade to become good at it. Like Red Bull.

But if a company like Vox.com can launch a whole news outlet in 15 weeks, I bet they can build – on top of their technology and distribution experience – a communication channel for a client that could generate them a mid-size six figure marketing budget. Something along the lines of what they just did for Intel. And here is the ultimate kicker. This is now burned money as it is with advertising. It doesn’t only take away the budget that Intel might have spent with a publisher like The Washington Post, it also ensures that they build something that will make Vox’s technology better and more competitive.

That’s why it scales.

Author: Igor

Igor likes to connect the dots. As a strategic consultant in an increasingly complex world, he favours broad knowledge over specialisation. In the last five years, he helped shape strategic decisions at large corporations like Deutsche Postbank AG and Deutsche Telekom AG as well as at startups like Amen and refund.me. In his work he is focusing always on finding the appropriate solutions as well as the people who will be executing upon his advice. Beside the consulting work, Igor speaks at international conferences on variety of topics (SXSW, PICNIC, re:publica, etc.).